The Standpoint of External Auditors to Fraud in the Audit of Historical Financial Statements

Abstract

This study aimed to determine the standpoint of external auditors to fraud in financial report audit. The purpose of this study is to broaden the understanding about fraud in financial report audit, and to determine how external auditors and the client management can appropriately act regarding the matter. The respondents of the study were 32 external auditors from selected auditing firms. The descriptive method was used because of its simplicity in gathering, analyzing, tabulating, and interpreting data. The survey questionnaire was the instrument used in collecting reliable data for analysis and interpretation. Statistical analysis was administered by using ranking, percentage, frequency, weighted mean, Pearson r Product-Moment Correlation Coefficient and Likert Scale to process the data collected. The respondent auditors are 20 up to 26 years old, female, single, bachelor’s degree holders, audit juniors, and have been serving their firm for 7 to 18 months. The fraud risk factors presented are motives or incentives, opportunities and rationale for one to commit fraud. As to the general responsibilities relating to fraud, these are the responsibilities of external auditors and the clients’ management to prevent and resolve fraud cases. As to the problems external auditors encountered and the possible solutions presented to the respondents, they agreed that they are the problems and strongly agreed on the possible solutions that can be undertaken to solve the said problems.